I have a small business – What expenses can I claim?
If you own a business or are a director who works from home, you may be able to claim certain expenses. These expenses can reduce the amount of tax you pay at the end of the year when calculated into your tax return.
What home expenses can I claim?
To claim expenses business expenses, the costs must be “wholly and exclusively” for the purpose of the business. It can be difficult to differentiate between personal and business use when assessing this. We would recommend that:
In broad terms, you need to assess what proportion of use is associated with your business and you can claim that percentage or portion back as a business expense. The good news is that you do not need to maintain two distinct bills.
You should maintain a written note/record of the expenses used for business purposes. This may even require you to go through the line items on a bill in order to accurately assess this.
What about my home office furniture?
If you purchase equipment for your home office, it can likely be claimed as an allowable business expense. For example, a laptop, printer or desk or would fall within this category.
You are allowed to use such equipment or facilities outside of office hours at no extra cost (if it was a reasonable business expense in the first instance). So while a desk lamp would be deemed reasonable, a wardrobe may not be.
Can I claim expenses for remote working?
More people are working remotely (or at off site hubs). Revenue recognises this concept of “e-working” and allows a tax-free payment of €3.20 per day. It is available to employees and directors alike.
This payment is surplus to the other categories of business expenses listed in this article. It is worth noting that income taxes (for example, PAYE, PRSI, and USC) are not deducted from this allowance.
What about utility bills – can I claim telephone and broadband costs?
You have two options
The simplest option is to buy a phone and claim it as a business expense.
If you would like to use the same number for both personal and business use, you need to assess the proportion spent on it for personal and business use. Once you have worked out a reasonable amount, you can claim this as a business expense in your tax return.
Additionally, if you have a generous business plan and your evening /weekend use does not exceed your plan, the whole cost of it could be attributable to the business.
Can I claim back my rent or mortgage payments as a business expense?
As briefly mentioned above, expenses should be wholly and exclusively for business use. Therefore rent or mortgage payments do generally not meet these criteria.
It is difficult (but not impossible) to show that a certain proportion of the rent is attributable to a home office. There are also capital gains tax and income tax considerations which need to be taken into account. Should you choose to sell your house at a later stage, you may not be able to fully claim principal private residence relief – and you could be liable to pay tax on the non-personal proportion. It is worth seeking professional advice to clarify any queries you may have.
I sometimes use my car for business – can I claim business expenses?
As an aside, you should first check with your motor insurer to see if you are covered for business use.
Regarding expenses, you are generally allowed to claim expenses so long as it is accurately recorded.
Personal Car used for business travel
You can claim back a rate per business kilometre travelled.
Employees and Directors can avail of this for business travel but be aware that sole traders cannot.
The Revenue sets out standard rates and they are known as civil service rates. https://www.revenue.ie/en/employing-people/employee-expenses/travel-and-subsistence/civil-service-rates.aspx
The rate will depend on the total kilometres driven and the engine size of the vehicle.
The amount spent on business travel can then be claimed against your tax bill at the end of the year.
Company car used for personal travel
You may be liable for tax on any personal use as it is seen as a benefit in kind. Revenue treats such use as notional pay or “perks”.
BIK taxes include PAYE, PRSI and USC and the rate depends on the original market value of the car.
Talk to Lalor and Company about your tax and accountancy needs. Lalor and Company are Ireland’s leading tax accountants offering services in Dublin and Wicklow. Contact us today.